Getting cheap car insurance

You may think that cheap car insurance is something elusive; however the good news is that there are ways of paying less for your motor insurance – it’s simply a case of knowing what factors influence the cost of your premiums and taking it from there.

In a nutshell, the things that affect how much you will pay for your car insurance are typically your age, gender, driving history, where you live, and what car you drive. There are also factors to consider when looking for cheap car insurance such as how secure your car is, whether it has had any modifications, how much excess you elect to pay and, finally, where you buy your insurance.

Let’s look at these one by one, staring with your age and gender. An older, experienced female driver will be a more attractive proposition to a car insurance provider than a novice, male, younger motorist. Obviously there is nothing you can do to change these factors but you can bear this in mind should you want to add on another driver to your policy.

Your driving history will affect the car insurance premiums you are liable to pay. Driving convictions and points on the licence can all make your premiums soar. Persistent offenders may find that some insurers will refuse to cover them at all, so drive safely, within the speed limits, and concentrate at all times. A clean licence will attract lower premiums than one littered with points and penalties.

Your postcode will affect the cost of your motor insurance. Typically, someone living in a large city may pay higher premiums than someone living in a more rural area. This is because, from the insurers’ perspective, with the former, the car is at more risk of being stolen, damaged or involved in an accident. Of course, looking to move and up sticks to get cheaper car insurance can seem a bit drastic!

Things that you can do to attract smaller premiums include driving a car that has a small engine size and is without modification. While most of crave owning and driving a flashy sports car, in truth you will typically be paying out lots more for the  cover than if you had chosen a more modest family vehicle. Making your car more secure in addition to the standard factory fitted security can often help attract a discount on the cost, too.

Another way to pay less for your cover is to pay more than the standard excess. By upping your voluntary excess, you are spreading the risk with your insurer, so he will reward you with cheaper premiums.

A common mistake than many motorists make is automatically renewing their insurance with the same insurer, without first checking out what other options are available. Never just accept the quote without seeing what other insurers are offering as you could end up paying out a serious amount more than you have to.

This leads to our last point - where you buy your insurance. There are many insurers out there all vying for your business, so, believe it a not, if you have a clean licence and drive an average sized car, you can cherry pick who you buy your car insurance cover from. Look out for insurers who offer additional benefits, such as free legal assistance, or free breakdown cover, or a discount if you buy online.

Cheap car insurance is available - it’s all about making you and your vehicle an attractive proposition for the insurer.

Choosing a car breakdown policy

Anyone who travels by car regularly could decide to seriously consider a breakdown cover policy. Unless a driver is a mechanic themselves with tools in the boot, they are unlikely to be able to deal with a major breakdown. Suffering a mechanical failure in the middle of the night on a deserted road is never a pleasant proposition. Without breakdown cover it's a potential nightmare, so a policy can at the very worst provide peace of mind while driving.

Cover now goes far beyond the likes of well-known firms such as the Automobile Association and a wide range of recovery and repair specialists are offering breakdown services. As with insurance, what someone gets for their money varies from one provider to another. Many car insurance firms will also offer breakdown as an extra on a policy, for an additional fee on top of the premium, although these will not always necessarily provide the best value.

Working out how a company prices their cover system can help someone save money – some will cover the person regardless of what vehicle they are in and some will only apply if the person in question is driving a particular car. A few breakdown firms will provide prices which are just based on the type of car while others will provide a more insurance-type fee scheme, judging a vehicle's age, mileage and frequency of use.

Most breakdown firms run a network system where their on-call patrols simply attend to a problem by the roadside and then, if necessary, tow the car to a nearby garage. This means a minimum of fuss but can be a little more expensive than some alternatives. Some firms operate policies which see customers call out local recovery experts to be towed to a garage – they then claim back the cost from their breakdown provider. This involves a little more trouble and perhaps a little less peace of mind, but can involve cheaper membership costs.

As with insurance firms, some breakdown companies will offer no claims discounts, cutting the cost of membership for people who have not had to make a call out. Some companies will also offer very cheap membership deals to people driving very new cars. As with insurance policies, potential customers should look carefully at what is included in their breakdown cover. Cheaper membership fees usually give a basic level of cover involving any roadside repairs and recovery to the nearest garage. Pricier memberships will involve home assistance, which will see a mechanic come out to help if a vehicle fails to start at home, while others will recover a vehicle and take its occupants to a location anywhere in the UK – useful for anyone travelling far away from home regularly.

What type of breakdown cover is relevant to a person depends very much on their circumstances – someone who usually drives only a short distance to work, not far from home, is unlikely to need the level of cover a travelling salesman might need, for example. Pay and claim policies can be a good bet for those looking to save money rather than get the most comprehensive level of cover.

There is no time like the present – and no time like the present for opening a savings account, with some particularly attractive rates of interest on offer. The silver lining to the dark clouds of the credit crunch is that banks and building societies are now more than ever eager to attract depositors’ savings and are prepared to woo them with a range of different types of account and rates of interest that in many cases exceed the Bank of England base rate.

Given the rising costs of everything from mortgages to the weekly expedition to the supermarket, many people will be finding it difficult to make ends meet, let alone put anything by for a rainy day. According to press reports at the beginning of September 2008, in fact, the average level of savings (including pensions) has fallen to just 1.1% of household incomes, which is the lowest since 1959 and a significant drop from the 8% average that has been maintained since the 1980s (the Telegraph, 9 September 2008).

Clearly, some measure of savings can prove to be a lifeline when the unexpected happens, although it is obviously difficult to say just how much needs to be put aside for such a crisis. Some people think that such an emergency savings fund should be equal to three to six month’s normal income, but having enough put by to cover the household bills for several months would be a prudent least target to aim for.

Saving even a small amount on a regular basis is a very useful way of building up some savings. If the deposit is made each month immediately after a salary is received it might even be possible not to have noticed the slight reduction in the balance of monthly spending! The added attraction then lies in knowing that such regular savings accounts tend to offer a somewhat higher rate of interest than accounts made up from sporadic and occasional deposits.

Another quite recent development is the effective blurring of the conventional distinctions between instant access and notice savings accounts. Generally, of course, choosing between savings accounts has been weighing up the higher rate of interest granted on a notice savings account – where notice of any withdrawal needs to be given the prescribed number of days or months in advance – against the convenience and flexibility of an instant access savings account, from which funds can be withdrawn immediately, on demand.

Although this is still generally the case, a certain blurring of the distinction has happened recently with the offer of higher than normal interest rates on certain “instant access” accounts. These maintain an attractive rate of interest, yet still grant immediate or instant access, if the need arises to make a limited number of withdrawals over a fixed period of time. If this limit is exceeded, however, the interest rate earned on the savings account is reduced.

To a certain extent, therefore, banks and building societies are currently so eager to attract new savers that savings accounts are available that offer the best of both worlds – instant access, within reasonable limits, and a relatively high rate of interest.

The growing number of online banking customers

Even by the standards of exponential growth so frequently associated with the internet, the rise in online banking in the past seven years or so has been quite phenomenal. Statistics published by the Association for Payment Clearing Services (APACS) towards the end of July 2008 showed that more than 21 million internet users in the UK bank online – in the year 2000, the number was just 3.5 million.

Similar studies have also shown that the number of times individual customers access their accounts online is also increasing, with the most accessed services now topping more than 6 visits each month.

It is not difficult to understand this explosion in the use of internet banking. Banks have made it very simple and convenient to do, allowing users access to their accounts 24 hours a day, seven days a week, from the comfort of their own homes. Online banking helps to do away with often frequently frustrating attempts to get through to call centres by telephone or even more time-consuming trips to the high street bank.

Practically all of an account-holders business can now be performed online. This includes making payments to other people and organisations, so that bills can be paid at the most convenient time, and also transfers between accounts, including credit card accounts. The latter provides a way of ensuring that monthly repayments can be paid as soon as they fall due or that the whole balance can be cleared by an online transfer, in order to avoid paying any interest on such credit spending. Transfers to online savings accounts can also ensure that the account-holder is taking maximum advantage of the opportunity to earn interest on cash that is not for immediate spending.

With the spread of online banking, more and more banks are encouraging their customers to forego hard copies of monthly statements by post. Such a paper saving exercise is naturally helpful to the environment and also further reduces the banks’ operating costs – savings which sooner or later should hopefully be passed back to the consumer.

Some things, of course, still need to be sent by post. A forgotten PIN number for a debit or credit card will need to be posted, but can nevertheless be ordered online. As to be expected, for the customer’s security, this can only be posted to the address that the bank has on file, so it is important to keep the address fully up to date with the bank.

Good news for banks and their customers alike is that increased security and enhanced technology seem to be winning the fight against losses from internet fraud. Worries about online security have been probably the single biggest disadvantage in many customers’ minds to internet banking. It will be welcome news, therefore, that APACS reported losses down by a third last year. Whilst online banking is becoming safer and safer from the risk of actual financial loss, therefore, it is nevertheless the case that fraudsters are still highly active in their attempts to gain unauthorised access to other people’s online accounts. According to ACAPS, there were over 20,000 attempted “phishing” cases in the first six months of 2008 – more than two and a half times as many as there were in the same period the previous year.